Tuesday, 10 April 2012

Tax transparency?

Nigel Farage opposes the notion of all politicians having to make their tax and earnings totally transparent, on the grounds that this would deter established and capable persons who had already achieved some measure of material success in their lives from entering politics to 'give something back'. I take his point. Polly on the other hand advocates that all of us should reveal our tax and earnings, so that we can look up the neighbours' claimed allowances in the internet. If all is open, tax avoidance is discouraged. I take her point. Livingstone's repulsive hypocrisy only came to light when his own income tax avoidance was revealed. And then he's lied about it, which is even worse.

Let me be honest. I avoid tax. I suspect most of us do; every father who has bought the champagne for his daughter's wedding in Calais is a tax avoider; every juvenile geek who has bought gadgets or CDs from Luxemburg or the Channel Islands (before the closing of that useful loophole) is a tax avoider. The fight for the boozy lunch receipt ('corporate entertaining'), 10,000 miles a year of 'business' mileage, the ergonomic office chair in front of your PC screen and all the rest. But then most of us aren't standing for public office with the power to raise taxes and charge others.

So why are avoiders demonised whilst evaders are getting no bad press at all? Paying your Polish builder in cash to avoid the VAT, or dishonestly claiming red diesel for a Webasto are surely morally more serious offences? Would Polly be happy to disclose all her builders' accounts, payments to her cleaners and domestic staff?

15 comments:

Just imagine all those highly-paid 'consultants', poring over public and private documents and publishing what they think 'fit'.

So there would be - say - three per borough, a dozen per county, about 150 for the london boroughs, the expats will have a few, then the central government will 'employ' several hundred more to administer the lot of them.

So we may get at a rough guess, about 3,000 new faces on huge salaries and pensions.

We are fretting about the symptoms instead of confronting the cause: the underyling problem here is that taxes are too damn high, because the State is too damn big and it needs all the cash it can lay its evil hands on, and then some.

If we stuck to the Lawson principle of taxes - "make them low, make them simple, and make them compulsory" - there wouldn't be the need, or the opportunity, for all these fiddles.

We make an annual declaration of income received and of tax already paid, and we make it to an agency of government (HMRC). And the tax inspector of every politician knows how much tax they have paid and how much income they have declared.

The problem is actually: (i) that tax levels are so high that, for nearly all, it is worth taking the risk of not paying some tax; (ii) the rules are so stupidly drawn up (and enforced) that is it easy for those with money to avoid some of the payment, and do that within the law; (iii) enforcement (including payment of welfare to the undeserving) is so arbitrary and unfair now that for HMRC (also like the police) public respect has been very severely weakened, if not gone in totality.

Only if government is decent and not ducking, weaving and snatching, will it have the respect necessary for the people to respect the rules made by government.

The solution to this current problem is not to replace government incompetence and evasion of duty with public shaming: it is to do away with most of that government incompetence and most of that government evasion of duty.

Personally, I use a number of tax avoidance schemes. I avoid paying road tax and petrol duty by not having a car. I avoid higher rate income tax by having a low paid job. I avoid paying VAT on high price luxury items by not having the money to buy them. Perhaps the government should put a stop to my apalling immoral behaviour by forcing me to have more money? Oh, and while they're at it, why not force me to start smoking to prevent me from avoiding tax on tobacco?

But the implications of extortionate government spending are far bigger than many realise, this is not just about our personal contributions and our honesty, nor is it about satisfying the lefty call for punishment of the rich.

I believe that in the early 20th century, the tax burden was somewhere around 15%, that has now reached 58%…

We were "Top Nation" then…

Apparently China's tax burden is in the mid 20%s…

Says it all really.

Government takes our money by force (and stealth... by borrowing), and wastes it. If we kept our money, we would be able to use it far more beneficially, in the interests of both the individual and the state.

As WY states, it is all about simplicity and quantity, if the system was simple, it would be difficult to avoid and if the quantity was small, it would not be worth the risk to evade.

I like the idea (well, like might be a bit strong) of sales tax, it must be the fairest system, everybody pays their way depending on what they spend, the less one earns, the less tax one pays.

This is what you get in a no-growth economy where most people's living standards are falling. In a zero-sum game, anyone else's gain is my loss. Hence the rise in envy, resentment and finger-pointing. The young are set against the old, the rich against the poor, the North against the South, the borrower against the saver, the employed against the unemployed. The answer is to get some growth back.

The difference between tax evasion and avoidance is illusory. It's all very well to say that evasion is illegal, but when the HMRC makes the law, interprets the law and changes the law retrospectively whenever it likes, then tax law has no moral authority.

I am perfectly comfortable with tax evasion, and I would certainly not point a finger at anybody for doing it (unless he was a public figure advocating higher taxes for everybody else of course.)

Remember, government can only pay out what it steals from people in tax. 90% of government spending is wasted. It follows as night follows day that if a person witholds tax from the government, (either by evasion or avoidance) then it cannot be wasted by the government. Tax avoision is therefore no more than one's patriotic duty.

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